Dive Brief:
- Elme Communities has completed the sale of five of its remaining properties – four multifamily and one office property — for approximately $252.7 million, as the REIT’s liquidation enters its final stages, according to a press release. Its target is to complete all remaining sales by mid-year 2026.
- The Bethesda, Maryland-based REIT also entered into purchase and sale agreements for four of its remaining properties for approximately $431.3 million. It is negotiating with a potential buyer on its one remaining asset, Elme Bethesda, and expects to enter into a purchase and sale agreement within the next several weeks.
- In total, Elme’s liquidating distributions to shareholders are projected to be between $16.74 and $17.02 per common share, compared to the estimated range of $17.02 to $17.47 per common share it announced in January. It estimates that the distributions from the sale of its remaining assets will range from $2.07 to $2.35 per common share.
Dive Insight:
Elme attributes the lower-than-projected liquidating distributions to reductions in the estimated range of proceeds from the sale of Riverside Apartments and the two remaining D.C. properties.
“The estimates of gross proceeds have continued to be negatively impacted by current market conditions in the D.C. area, which have been subject to prolonged softening throughout our marketing and sale process generally,” Elme said in the press release.
The REIT’s adjusted estimated range of liquidating distributions also includes minor adjustments for incremental increases in estimated debt service costs, capital expenditures and general and administrative expenses. Those were partially offset by less-than-expected estimated transaction costs and other expenses, as well as minor increases in the estimated cash flow/net working capital to be generated from its property operations.
Elme began its sell-off last year. The REIT, formerly known as WashREIT until 2022, had expanded its presence outside the Washington, D.C., metro area by acquiring properties in Atlanta. Still, its stock continued to trade at a discount to private-market values, forcing it to explore alternatives.
After initiating a “formal evaluation of strategic alternatives” last year, it took the first step to liquidating the company by selling 19 properties to an affiliate of Atlanta-based investor, developer and manager Cortland Partners for $1.6 billion in cash last November.
Following the closing of the Cortland sale, Elme and certain subsidiaries entered into a loan agreement with Goldman Sachs Bank USA, as lender, for a senior secured term loan with a principal amount of $520 million and a maturity date of Nov. 9, 2026. The REIT has the option to extend for an additional year. The term loan is intended to be repaid from the net proceeds of the sale of the properties securing the term loan.
In addition to declaring a special liquidating distribution of $14.67 per common share paid on Jan. 7 to Elme shareholders, a portion of the term loan was repaid using part of the net proceeds from the $252.7 million in sales from Elme Sandy Springs, Elme Marietta, Elme Conyers and Elme Germantown and one office asset, Watergate 600, per the release.
Elme has targeted the closing of Elme Watkins Mill for later in the second quarter and the closings of Riverside Apartments, The Kenmore and 3801 Connecticut Avenue for between late second quarter and early third quarter of 2026.
The REIT projects that its delisting from the New York Stock Exchange and dissolution process will occur in the third quarter of 2026.
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